How David Bowie Turned ‘Bowie Bonds’ Into $55 Million Payday

The dream for any copyright holder is to have one's works become popular enough to generate a steady stream of "mailbox money" — royalty checks that can keep an artist in beach houses and Maseratis well into his golden years. But as appealing as that sounds, a massive onetime windfall also has its perks, as David Bowie proved with the sale of "Bowie Bonds" in 1997.

Coming out of the '80s, Bowie's critical and commercial fortunes had reached something of a low ebb. After making a major comeback with 1983's Let's Dance, subsequent pop-oriented efforts Tonight and Never Let Me Down produced diminishing returns, and his detour into hard rock with the Tin Machine project provoked a divisive response among fans and rock writers alike. It was easy to assume, in other words, that the rock visionary had lost sight of his muse — but in reality, he was just as focused on the future as he'd ever been.

This time, however, Bowie's foresight paid financial rather than creative dividends. As announced on Feb. 12, 1997, he partnered with the Prudential group for a deal billed as the first of its kind — one that bundled together future earnings from his recordings released prior to 1993 and put them into so-called "Bowie Bonds," 10-year bonds set to mature with an interest rate of 7.9 percent.

Although certainly unique, the bonds appealed to investors for a number of reasons. Aside from the allure of getting in on something new at the ground floor, the Bowie bonds presented what was at the time viewed as a steady longterm investment. While Bowie's recorded output had certainly seen its share of ups and downs on the charts, he was moving into the elder statesman period of his career, and since the advent of CDs, his catalog had already been reissued and repackaged to wide acclaim — and was still selling to the tune of roughly a million units a year.

Those reissues were the result of another visionary move on Bowie's part. As Billboard later noted, he was among the earliest artists to negotiate ownership of his masters, which allowed him to license distribution to various corporate partners as he saw fit — thus setting in motion catalog deals like the one he signed with Rykodisc in the late '80s, paying off handsomely for himself as well as the then-fledgling label.

But rather than continually playing musical chairs with distributors or selling the masters outright, Bowie — in tandem with David Pullman's Pullman Group — hit upon the idea of selling their future earnings. Pullman, estimating the value of Bowie's catalog at $100 million and betting on another decade of steady record sales, had the bonds rated by the top credit agencies; with their stamp of approval, the bonds were greeted with plenty of willing buyers, leading to Bowie's historic payday — and a new type of business for Pullman, who used the Bowie deal to launch himself into a series of celebrity bonds.

The timing proved to be just about perfect for Bowie. Album sales skyrocketed toward the end of the '90s, with industry profit margins goosed by the cheap-to-manufacture CD — but the MP3 loomed just around the corner, and with it the rise of file-sharing networks like Napster. At the dawn of the 21st century, the music business suddenly found itself staggering in crisis, with sales slumping and a volley of lawsuits targeting consumers that left the industry with a PR black eye.

The industry's woes were particularly keenly felt by veteran artists who depended on catalog sales for consistent income — a pain that spread to the owners of Bowie bonds, who saw their investment tank as music fans drifted away from record stores. By 2004, the bonds had fallen almost to "junk" status, but Pullman remained bullish on their earning potential.

"The bonds have not defaulted and will not default. The value of the assets of David Bowie's catalog, publishing and recording masters are far in excess of the outstanding balance of the bonds," he insisted. "This type of deal was only ever appropriate for legends with big catalogs."

Although it's demonstrably more difficult for musicians to earn a living today — even at the level of recognition and acclaim Bowie had reached by the late '90s — Pullman's optimism was eventually reflected by reality to some degree. Despite undeniable growing pains during the dawn of the digital era, the industry has started catching up to the earning potential in the streaming and download sectors, and while the situation is still far from perfect, there may be reason to believe future royalty leverages could pay off for investors.

"The sources of revenue are increasing, even though CD sales are lower," Pullman told CNN after Bowie's death in 2016. "And after his death, it's going to increase as well."

Of course, cynically betting on sales skyrocketing after an artist's death is probably a bridge too far for anyone who isn't a character in a Seinfeld episode, but those increased sources of revenue remain appealing for modern investors — as evidenced by the 2017 news that a company holding the rights to some of rapper Eminem's early recordings is trying to put together a "Bowie Bonds"-type deal. Those works don't have the same track record, licensing potential or cultural cachet enjoyed by the motherlode offered to investors in 1997, but we're also looking at a very different musical landscape. If the Eminem bond buyers end up turning a profit, they'll have David Bowie — and David Pullman — to thank.